April 23 | Educated Guess

Districts would get small reimbursements

By John Fensterwald

A bill working its way through the state Senate would require the state to share the financial burden it causes the next time it delays money due K-12 districts. Only a portion of the short-term interest charges that many districts face when forced to take out short-term loans would be reimbursed. But SB 1491 at least would recognize that billions of dollars in late payments can create an expensive cash crisis for districts, many of them in low-income areas.

Within the past decade the state has used late payments, called deferrals, to help balance the budget. At this point, $10.4 billion -- about 30 percent of state money owed to K-12 and community colleges -- is budgeted in one fiscal year, but paid in the next year. Districts that cannot borrow internally, from their own accounts, have turned to county offices of education if available or to the open market, at interest rates from a few percentage points up to double-digit rates for some charter schools.

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